Inflation to add £18.2bn to UK retail sales
Nearly a quarter of retail firms plan to increase delivery costs while only 18% said they would not increase the price of products, delivery or returns
Inflation is set to add around £18.2bn to non-food sales in the UK according to the Ecommerce Delivery Benchmark Report 2023, commissioned by Auctane in partnership with Retail Economics.
Sales values are expected to hit £249bn in 2023 with the additional £18.2bn, a 2.6% increase, driven entirely by rising consumer prices.
A survey of more than 730 retail businesses across eight international markets found that 80% of retailers are planning to increase prices with 40% suggesting rising costs will be their biggest challenge this year.
It found that two thirds of UK consumers said inflation is their biggest concern. Nearly three quarters of people plan to change their buying behaviour, with 34% saying they would only make necessary purchases while 29% intend to delay or reduce spending.
As a result, UK retail sales volumes are set to fall by 4.9% compared with last year due to shoppers having to spend more to get less for their money. Retail inflation is expected to hit 7.5% this year.
Nearly a quarter of retail firms plan to increase delivery costs while only 18% said they would not increase the price of products, delivery or returns.
Richard Lim, Retail Economics CEO, said: “Retailers will continue to face a toxic mix of pressures this year as rising input and operating costs collide against a backdrop of weaker consumer demand, rising interest rates and shifting consumer behaviours.
“These conditions favour those retailers who have strong balance sheets who can invest heavily in price, leverage data to target their most valued customers and win new ones, while efficiently utilising stores to provide a truly omnichannel proposition.”
